Jim’s Notes – Sofware Leads Upside Move

Moving the Market – June 27th

The markets started lower but managed to move back into positive territory on Wednesday. The NASDAQ and SP500 closed in positive territory as it was a struggle throughout the day to find leadership. Consumer discretionary for the second day showed an upside momentum and software was up 2.1% to lead the day. Mega caps did their part again on the day showing leadership again. ZS, PANW, and DDOG lead the upside move. Six of the eleven sectors were higher on the day better than the two on Wednesday. QQQ fell to support Monday at the $474 level and produced a modes bounce the last three days. The dollar was lower, interest rates ticked lower at 4.28%, and Gold was higher along with crude oil. XLF was lower for the third day as it remains in a short-term trading range. XLT and IYT led the downside. The market breadth was positive, but there wasn’t a lot of conviction on either side of the tape. Watching money flow for clues where investors are willing to put money to work. IYR bounced back on housing data. On the economic front, GDP was in line with expectations at 1.4% growth. Durable Goods were up 0.1% versus an expected loss of 0.1%. Goods less transportation was -0.1% versus +0.4% prior. Pending home sales fell 2.1% versus -0.4% expected versus -7.7% prior. Continuing claims for the weekly job report show a softening job market. The economy is still not a pretty picture. Friday brings the PCE data before the opening and will no doubt set the tone for the day. Plenty of news and data to digest with the first half of 2024 coming to a close.

The major indexes closed higher on the day with sectors still showing mixed trading. The volume was above average with VIX dipping lower. The activity started lower and the afternoon bounce pushed the index to positive territory. Thursday the NASDAQ closed up 0.3%, DIA was up 0.1%, and the SP500 was up 0.1%. The SOXX was down 0.1%. Small Caps (Russell 2000) were up 1%. The ten-year treasury yield was 4.28% down 3 bps and TLT was up 0.4% for the day. Crude Oil (USO) was up 1.4%. (UGA) was up 0.3%. Natural gas (UNG) was down 1.8%. The dollar was down 0.1%. Plenty to deal with moving forward as we manage our money and emotions relative to the current environment.

Friday Outlook: The markets are in the final week of June and the end of the 2nd quarter. There has been plenty of data to digest and plenty on the way. Watching how the parts look relative to the whole. As seen below the breadth is still very narrow for the overall market with some juggling over the last six days. The move on Thursday came from IYR. Commodities continued to struggle as they look for direction and catalysts. What are we watching? 1) The dollar moving higher. 2) Interest rates at 4.28% and still showing volatility. 3) Crude oil remains above $80… 4) Natural gas remains volatile as it moved lower on Thursday. 5) DBA moving lower as commodities overall look for direction. 6) Mega caps tested… is there more to come? 7) Small caps bounce is it real this time… not yet. Taking what is offered and balancing the risk.

The chart below shows the breadth issue for the SP500 sectors compared from the beginning of the current leg higher that started in April. The technology sector is the only one to outperform the index… Note the move in XLY the last two days.

Headlines Worthy of Note:

The US needs major nuclear expansion to meet rising electricity demand. The US needs to install more than 10 gigawatts of nuclear power according to the Southern Company (SO). This continues the theme that started in April relative to higher demands for energy.

Micron shares fall as they fail to meet elevated expectations. AI is a double-edged sword that inflates prices and deflates them even faster if the beliefs are not met. The stocks we down nearly 6% after hours. NVDA has been in the same boat of late falling 7% from last week’s highs. XLU has been in a modest downtrend since June highs.

NASDAQ big names. AAPL added to the bounce. AMZN breaks higher follows through up 6.1% last two days. GOOG added 0.8% from Tuesday’s breakout. META added 1.2% to the upside. MSFT inched higher. NFLX is up 1% after holding the 10-day MA. TSLA added to the 4.8% gain from Wednesday. They are still setting the tone for the markets overall.

Money Market Funds hit a record $6.12 trillion. Wall Street wants it invested… of course they do.

Quote of the Day: “To know what you know and what you do not know, that is true knowledge.” — Confucius.

Hot Topics

Jim's Notes latest update directly to your inbox!

Please enable JavaScript in your browser to complete this form.
Scroll to Top